The strategy for climate change in the maritime sector

Seoul International Maritime Forum

Seoul International Maritime Forum“The strategy for climate change in the maritime sector”14 October 2010Keynote speech by Efthimios E. MitropoulosSecretary-General, International Maritime Organization

Minister, Excellencies, Chairmen of the IMO Council and Legal Committee, Mr. Popp, distinguished members of the maritime community of the Republic of Korea, fellow speakers, media representatives, ladies and gentlemen,

How appropriate it is that this great city of Seoul should be the venue for a forum examining the strategy for climate change in the maritime sector.

For not only is Seoul one of the so called “C40” group of large cities committed to tackling climate change by establishing and implementing immediate and practical measures for the mitigation of greenhouse gas emissions and taking responsibility for their contribution to climate change; not only was it in Seoul that, in May 2009, representatives of 80 leading cities from around the world met to discuss climate concerns under the theme of “Cities’ Achievements and Challenges in the Fight against Climate Change”; not only has Seoul given its name to the landmark declaration emerging from that summit; but it was in Seoul, just over a year ago, that the Government of the Republic of Korea unveiled an ambitious five-year plan to invest more than 100 trillion Won to develop environmentally friendly industries and use them as a growth engine for the wider economy.

So I feel very much that we are in the right place for consideration of such a vital topic; and it is certainly the right time, too, just a week and a half after the most recent meeting of IMO’s Marine Environment Protection Committee devoted many hours to the discussion and debate of what is, without doubt, one of the most complicated and difficult issues ever to have come before the Organization.

Although international maritime transport is the most energy efficient mode of mass transport and only a modest contributor to global CO2 emissions (2.7 per cent on 2007 data), further improvements in energy efficiency and emission reduction are being actively sought (by Government, through IMO, the shipping industry and environmentalist groups), as sea transport is predicted to continue growing significantly in line with world trade and the attendant growth of the world merchant fleet.

IMO’s work on measures to enhance ships’ energy efficiency and thereby control and reduce their greenhouse gas emissions has evolved and developed over several years in tandem within the United Nations and in direct response to the mandate assigned to the Organization by the 1997 Kyoto Protocol. It consists of three distinct ‘building blocks’: technical and operational reduction measures, development of which is all but finalized, and market-based mechanisms, on which the Organization currently has also done a great deal of work and which are being pursued in accordance with a work plan set to culminate in 2011. I should like to outline these measures and, in particular, the latest progress that has been made on them at IMO.

All three pillars of the IMO action plan will be analysed and commented upon by the galaxy of speakers the organizers of this Forum have brought together to assist in this Forum.

Addressing first the technical and operational measures: hot off the press – relatively speaking – is the news that a working group of the MEPC has now completed the drafting of regulations for an energy efficiency design index, known as the EEDI, which would enable a minimum energy efficiency level for new cargo ship designs to be established. The EEDI is a complex mathematical formula that provides a specific energy efficiency figure for an individual ship design, expressed in grams of CO2 per ship’s capacity-mile, e.g. tonne-mile. A smaller EEDI value means a more energy-efficient ship design. Reducing the required EEDI, over time, will stimulate continued technical development of all the components influencing the fuel efficiency of a ship and provide a transparent mechanism for comparison of the energy efficiency of individual ships.

Not only could it be the basis of the regulatory mechanism by which ship designers and builders would be required to produce increasingly energy-efficient ships, it would also be a useful tool for achieving such efficiencies, from a technical point of view.

It is proposed that the required EEDI would be reduced over time, in phases. The reduction level in the first phase is set to be 10 per cent, with further tightening every five years thereafter to keep pace with developments in efficiency and emission-reduction technologies. Reduction rates have been proposed until the period 2025 to 2030, by which time a 30 per cent reduction could be mandated for most ship types, calculated from a baseline representing the average efficiency for ships built between 1999 and 2009.

The EEDI can provide a robust mechanism to increase the energy efficiency of ships for many decades to come. The beauty of the EEDI lies in its being a non-prescriptive performance-based mechanism that leaves the choice of technologies to use in a specific ship design to the industry players – so long as the required energy-efficiency level is attained. It means naval architects and shipbuilders are free to use the most cost efficient solutions and incentivized to continue with innovative technical development.

The EEDI is currently developed for the larger and most energy-intensive segments of the world merchant fleet – oil and gas tankers, bulk carriers, general cargo ships and container ships. Collectively, these account for some 72 per cent of projected emissions from new ships. For ship types not covered by the current formula, suitable formulae will be developed in the future, addressing the largest emitters first.

The second technical measure is the Ship Energy Efficiency Management Plan, known as the SEEMP, the purpose of which is to establish a mechanism by which a shipping company and/or a ship can improve the energy efficiency of vessel operations – and this is meant to apply to existing vessels, too.

Although sea transport is already, as I said before, the most energy-efficient mode of bulk transportation, enhancements in efficiencies can, nevertheless, reduce fuel consumption, save money and decrease the environmental impacts from ships still further.

While the yield of individual measures may be small, the collective effect across the entire fleet of merchant vessels will be significant. In global terms, operational efficiencies delivered by a large number of ships will make a considerable contribution to reducing global carbon emissions.

The SEEMP provides an approach for monitoring ship and fleet efficiency performance over time, using the so-called Energy Efficiency Operational Indicator as a monitoring tool and benchmark; and it encourages the shipowner, at each stage of the plan, to consider new technologies and practices when seeking to optimize the performance of the ship.

In this content, the Second IMO GHG Study, completed in 2009, indicated that a 20 per cent reduction of emissions, calculated on a tonne-mile basis, is achievable, mainly by operational measures, and would be cost-effective even with higher fuel prices. The SEEMP will assist the shipping industry to achieve this potential – which would be in addition to the reductions stipulated as a result of introducing the EEDI.

With regard to the third “building block” in IMO’s GHG strategy, the market-based measures or MBMs, the most recent meeting of the MEPC also held an extensive debate on how to progress their development following the submission of a comprehensive report by an Expert Group, which I commissioned last April to carry out a feasibility study and impact assessment of several possible market-based measures already submitted by governments and observer organizations.

The scope of the work of the Expert Group was to evaluate the various proposals on possible MBMs, with the aim of assessing the extent to which they could assist in reducing GHG emissions from international shipping. Priority was given to the maritime sectors of developing countries, least developed countries and small island developing states. The MBM proposals under review ranged from a contribution, or levy, on all CO2 emissions from international shipping or only from those ships not meeting the EEDI requirement, via emission trading systems, to schemes based on a ship’s actual efficiency, both by design, i.e. EEDI and operation, i.e. SEEMP.

Following the debate, which itself was not conclusive, the Committee agreed to hold an intersessional meeting in March 2011 dedicated to solely consider MBMs, in order to enable further progress in line with the agreed work plan, by narrowing down the number of proposed schemes.

Ladies and gentlemen, the control of GHGs from shipping has been a complex and difficult task from both a conceptual and a technical perspective and, in my view, there can be no denying that the achievement of the Marine Environment Protection Committee in developing these measures to the extent that it has, along with the associated draft regulatory texts, is substantial and worthy of considerable praise.

But the political aspects of this issue have proved just as difficult, if not more so, for the IMO Member States. How should these measures be applied, and to whom? Should they be mandatory or voluntary? If mandatory, should they be introduced in IMO’s regulatory regime by means of amendments to an existing convention or form a new, stand-alone instrument? All of these questions have vexed the membership of the Organization and it has not yet been possible for them to reach consensus on them.

At the most recent meeting of the MEPC, for example, the Committee, having noted that some States did not support the circulation of the proposed amendments with a view to adoption as amendments to MARPOL Annex VI, also noted the intention of some other States Parties to that Annex VI (which contains regulations for the prevention of air pollution from ships), to request the circulation of the EEDI and the SEEMP as proposed amendments to that same Annex. Any thus circulated draft amendments would then be considered by the Committee’s next session, in July 2011, with a view to adoption under the said Annex. If so adopted, they will then become mandatory as from a date to be decided by the Committee, which should not be earlier than 16 months following the date of their adoption.

Personally, I view the outcome of the meeting as positive in the circumstances. Although decisions as to how to proceed with the next step of IMO’s climate change strategy were not reached by consensus, in spite of prolonged discussions to that effect, nevertheless the Committee made progress on all three elements of its work and it is expected that further substantial progress will continue to be made at the July 2011 meeting.

To serve effectively maritime trade on the one hand and safety, security and environmental concerns on the other, requires a fine balance to be achieved. IMO, in partnership with the shipping industry and in consultation with environmental groups, is charged with developing and maintaining an international regulatory framework that allows just such a balance to be achieved and maintained – a framework within which efficient, clean, competitive and commercially successful shipping operations can take place.

But let us bear in mind that the subject of this Forum is “The strategy for climate change in the maritime sector”; and, while the discussions in IMO regarding the regulatory framework surrounding climate change will be a key element in any such strategy, there is clearly a great deal that the industry can do of its own accord to develop and implement schemes to mitigate the contribution of shipping to GHG emissions and climate change.

Indeed, I am firmly convinced that the industry and its regulators share common aims in this respect. This is a quest on which we are jointly embarked and in which success will produce a “win-win” situation. After all, improvements in vessel efficiency will result in lower fuel consumption, from which everybody benefits. I, therefore, feel encouraged that, working together, we will be able to make a genuine, substantial and lasting difference.

The importance of doing so cannot be underestimated. Despite the current global economic downturn, demand for shipping services will continue to rise, over time. The global economic outlook may be uncertain but one thing of which we can all be fairly sure is that, no matter how global markets may contract, expand or otherwise metamorphose, there will always be a demand for ships and shipping.

Decade on decade, seaborne trade has continued to grow and, with the world’s population continual rise, the demand for shipping to satisfy the latter’s needs can only increase. The reality is that, in good times and bad, in today’s global economy, hundreds of millions of people all over the world rely on ships to transport the great multitude of commodities, fuel, foodstuffs, goods and products on which we all depend – and this is not going to change as long as the oceans continue to cover the largest part of the surface of the earth and no transport mode is capable to challenge the mass transportation superiority of ships.

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Ladies and gentlemen, the efforts of shipping and of IMO, as its international regulatory body, to help stem climate change must, of course, be seen within the context of the overall efforts of the world as a whole to reduce greenhouse gas emissions. The Conference of Parties to the United Nations Framework Convention on Climate Change provides the international focal point for such efforts and the next round of talks is scheduled to take place in Cancún, Mexico, in forty days from now. Of course, we cannot predict with any certainty the outcome of this summit, if the precedent of last year’s Conference in Copenhagen has taught us any lesson. But I think we can, and should, entertain realistic expectations about feasible progress towards the eventual conclusion of a global deal on climate change mitigation – as long as the political will to stem climate change and global warming is there. UN Secretary-General Ban Ki-Moon has suggested that small steps might be a better approach to wider consensus-building. And senior negotiators in several of the most active countries on the issue believe that enough tangible progress could be made in several areas (particularly in moving forward topics successfully tacked in Copenhagen), provided there is “a paradigm shift” in attitude away from insisting that “nothing is agreed until everything is agreed”.

I think these are wise words to which all concerned would do well to pay heed when addressing climate strategies for the maritime sector. If the maritime community’s response to climate change is to serve the best interests of shipping and, most important of all, of the environment itself, the measures developed must be workable, effective, well balanced and proportionate to the level of responsibility of shipping within the world total of greenhouse gas emissions. For the issue, as a whole, to be successfully addressed, however, it is imperative that it be left to IMO to consider and provide the right answers at the right time – without any external pressure on the Organization to deliver within unrealistic deadlines.

The slowing and reversing of climate change has, quite rightly, been identified as the defining challenge of our era. All of us have a stake in this – individuals, Governments and industries – and now is the time when we must, collectively, step up our efforts. I mentioned earlier the Seoul Declaration and I think it is worth drawing attention to one of its pledges, namely that the cities concerned will (and I quote) “work together to accelerate delivery of low-carbon technologies, programmes and financing, including through active coordination”. That, surely, is the way forward for us all.

To conclude: Thank you to the Government of the Republic of Korea for inviting us here and congratulations for the excellent organization of this Forum.